Financial Data and Key Metrics Changes - Revenue for Q2 2025 reached $10.2 million, a 42% increase compared to $7.2 million in Q2 2024, aligning with previous guidance of 40% to 50% growth [14][5] - Gross margin improved to 78.3% from 73.2% year-over-year, reflecting reduced production costs and strategic pricing [14][16] - Operating income was $1.9 million, slightly down by $100,000 from the previous year, while net income decreased to $1.1 million from $6.6 million due to lower non-cash gains [15][16] Business Line Data and Key Metrics Changes - Sold 116 Ultramist systems in Q2, marking a 61% increase year-over-year and an 18% increase from Q1 [5] - Applicator revenue constituted $6.4 million, representing 63% of overall revenues, with a 37% year-over-year growth [6][14] - Customer concentration decreased, with only one customer exceeding 5% of revenues [6] Market Data and Key Metrics Changes - The company is focusing on expanding awareness and adoption of Ultramist, particularly in wound care centers, nursing homes, and hospitals [11][33] - There is a noted increase in inbound inquiries, indicating a potential adoption threshold has been crossed [10][11] Company Strategy and Development Direction - The company is transitioning to a new applicator design aimed at increasing production capacity and reducing costs, expected to impact margins positively in early 2026 [7][26] - A concerted outbound marketing campaign is planned for October, targeting specific wound types and customer segments [10][33] - The company is also enhancing its sales infrastructure, having fully staffed its national sales territories for the first time [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's progress and the potential for sustainable, profitable growth [13][17] - The company is cautious about Q3 guidance due to tough comparisons from the previous year but remains focused on disciplined execution [18][19] Other Important Information - The company is moving to a new office space to accommodate growth, indicating operational expansion [20] - The company holds a significant patent portfolio, which is seen as a core asset for future growth and potential monetization opportunities [51] Q&A Session Summary Question: Impact of new production process on gross margin - Management expects to gain 350 to 400 basis points of additional margin from the new applicator design, with gradual impact starting in early 2026 [24][26] Question: Sales team adequacy - Management feels confident in the current sales team but is open to adding more representatives as needed [29][31] Question: Marketing program focus - The marketing program will target specific wound types and customer segments, aiming to build trust and awareness in the market [33] Question: Update on senior secured debt - The company is in the process of refinancing its debt and has received attractive term sheets, indicating a significant improvement over current terms [37][38] Question: Pipeline for large accounts - Management highlighted recent additions to the approved vendor list of a large hospital chain, indicating potential for significant sales growth [44][45] Question: Value of patent portfolio - The company has a large patent portfolio related to Shockwave and ultrasound technologies, which is seen as a core asset for operations and potential monetization [50][51]

Financial Performance - Revenue for Q2 2025 reached $10.2 million, a 42% increase compared to $7.2 million in Q2 2024 [13] - Gross profit for Q2 2025 was $8.0 million, up 52% from $5.2 million in Q2 2024 [13] - Gross margin improved to 78.3% in Q2 2025, a 513 basis point increase from 73.2% in Q2 2024 [13] - Operating income for Q2 2025 was $1.9 million, a 6% decrease compared to $2.0 million in Q2 2024 [13] - Adjusted EBITDA for the three months ended June 30, 2025, was $3.37 million, compared to $1.457 million for the same period in 2024 [18] UltraMIST Performance - UltraMIST saw continuous revenue growth in 2024 and strong year-over-year growth in Q2 2025 [20] - The company had 1,261 UltraMIST systems in the field at the end of Q2 2025 [22] - 116 UltraMIST systems were sold in Q2 2025, compared to 72 in Q2 2024 and 98 in Q1 2025 [22] Revenue Guidance - The company projects Q3 2025 revenue to be between $12 million and $12.7 million, compared to $9.36 million in Q3 2024 [25] - The company targets full-year 2025 revenue to be between $48 million and $50 million, representing a 47-53% increase compared to $32.6 million in FY 2024 [25]

Executive Summary & Highlights [Q2 FY2025 Financial Highlights](index=1&type=section&id=Q2%20FY2025%20Financial%20Highlights) Sanuwave reported record Q2 FY2025 revenues, with strong gross margin and Adjusted EBITDA growth, offset by lower GAAP operating income and net income Q2 FY2025 Financial Performance | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (%) | | :--------------------- | :-------------------- | :-------------------- | :--------- | | Revenue | $10.2 | $7.2 | 42% | | Gross Margin | 78.3% | 73.2% | +5.1 pp | | GAAP Operating Income | $1.9 | $2.0 | -5% | | Net Income | $1.1 | $6.6 | -83.3% | | Adjusted EBITDA | $3.4 | $1.5 | +126.7% | - Q2 2025 revenues of **$10.2 million** represent the highest Q2 quarterly revenues in Company history[2](index=2&type=chunk) - Q2 2025 GAAP Operating Income included equity compensation costs of **$1.1 million**, compared to **$0** in Q2 2024[4](index=4&type=chunk)[9](index=9&type=chunk) - Net income decrease in Q2 2025 was primarily due to a **$5.3 million** gain on extinguishment of debt in Q2 2024 that did not recur[9](index=9&type=chunk) [CEO's Statement and Strategic Outlook](index=1&type=section&id=CEO's%20Statement%20and%20Strategic%20Outlook) CEO Morgan Frank highlighted strong Q2 and H1 2025 performance from UltraMIST sales and sales team rebuilding, anticipating breakout in Q4 2025 and 2026 - Achieved **51% revenue growth** in the first six months of 2025 vs. the same period in 2024[8](index=8&type=chunk) - Sold **214 UltraMIST systems** in the first six months of 2025, an **86% increase** over the same period in 2024, surpassing full-year 2023 sales[8](index=8&type=chunk) - **116 UltraMist® systems** were sold in Q2 2025, up from **72** in Q2 2024 and **98** in Q1 2025[9](index=9&type=chunk) - UltraMist® consumables revenue increased by **37% to $6.4 million** in Q2 2025, representing **99%** of Sanuwave's overall revenues[9](index=9&type=chunk) - Company achieved full national sales coverage as of mid-July, following Q1 and Q2 focused on building and reshaping sales and commercial operations teams[8](index=8&type=chunk)[10](index=10&type=chunk) - Q3 2025 is expected to be a quarter of 'max construction' with new sales and marketing practices, including the launch of the first concerted marketing program, to set up for breakout performance in Q4 2025 and 2026[10](index=10&type=chunk) [Financial Outlook and Guidance](index=2&type=section&id=Financial%20Outlook%20and%20Guidance) Sanuwave provided revenue guidance for Q3 2025 and reiterated its full-year 2025 revenue guidance, projecting continued strong growth Revenue Guidance | Period | Revenue Guidance (in millions) | | :------------- | :----------------------------- | | Q3 2025 | $12.0 - $12.7 | | Full Year 2025 | $48.0 - $50.0 | - Full year 2025 revenue guidance represents a **47-53% increase** compared to full year 2024 revenue[11](index=11&type=chunk) Company Overview [About Sanuwave](index=2&type=section&id=About%20Sanuwave) Sanuwave Health, Inc. provides FDA-approved wound care products, specializing in patented, non-invasive medical systems for tissue repair and regeneration - Sanuwave focuses on patented, non-invasive, and biological response-activating medical systems for tissue repair and regeneration[14](index=14&type=chunk) - The company offers an end-to-end wound care portfolio of regenerative medicine products[15](index=15&type=chunk) - Sanuwave applies its energy transfer technologies in wound healing, orthopedic/spine, aesthetic/cosmetic, and cardiac/endovascular conditions[15](index=15&type=chunk) Non-GAAP Financial Measures [Explanation and Rationale](index=3&type=section&id=Explanation%20and%20Rationale) This section defines non-GAAP financial measures (EBITDA, Adjusted EBITDA) and their use by management for performance assessment and strategic decision-making - Non-GAAP financial measures (EBITDA and Adjusted EBITDA) supplement, but do not replace, U.S. GAAP measures[16](index=16&type=chunk) - Adjusted EBITDA is defined as Earnings before Interest, Taxes, Depreciation and Amortization, adjusted for the change in fair value of derivatives and any significant non-cash or infrequent charges[17](index=17&type=chunk) - Management uses these measures to evaluate historical and prospective financial performance, performance relative to competitors, and to make operational and strategic decisions[17](index=17&type=chunk) [Limitations](index=3&type=section&id=Limitations) The company acknowledges that non-GAAP financial measures like EBITDA and Adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for U.S. GAAP results - EBITDA and Adjusted EBITDA do not reflect every expenditure, future capital expenditure requirements, or contractual commitments[18](index=18&type=chunk)[20](index=20&type=chunk) - These measures do not reflect all changes in working capital needs or interest expense/debt servicing amounts[20](index=20&type=chunk) Forward-Looking Statements [Disclaimer](index=3&type=section&id=Disclaimer) This disclaimer emphasizes that forward-looking statements are not guarantees of future performance, involve inherent risks, and the company undertakes no obligation to update them - Forward-looking statements are not guarantees of future performance and involve risks and uncertainties beyond the Company's control[19](index=19&type=chunk) - Key risks include regulatory oversight, capital resource management, competition, and other factors detailed in SEC filings[19](index=19&type=chunk) - The Company undertakes no obligation to update any forward-looking statement, except as required by applicable law[21](index=21&type=chunk) Condensed Consolidated Statements of Comprehensive Income (Loss) [Three and Six Months Ended June 30, 2025 and 2024](index=9&type=section&id=Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section details Sanuwave's comprehensive income (loss) for Q2 and H1 2025 vs. 2024, highlighting revenue growth, gross margin, net income, and EPS changes Condensed Consolidated Statements of Comprehensive Income (Loss) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $10,164 | $7,162 | $19,506 | $12,948 | | Cost of Revenues | $2,206 | $1,922 | $4,164 | $3,506 | | Gross Margin | $7,958 | $5,240 | $15,342 | $9,442 | | Gross Margin % | 78.3% | 73.2% | 78.7% | 72.9% | | Total Operating Expenses | $6,081 | $3,248 | $12,479 | $8,500 | | Operating Income | $1,877 | $1,992 | $2,863 | $942 | | Total Other Income (Expense) | $(822) | $4,569 | $(7,484) | $1,091 | | Net Income (Loss) | $1,055 | $6,561 | $(4,518) | $2,033 | | Basic EPS | $0.12 | $2.08 | $(0.54) | $0.65 | | Diluted EPS | $0.01 | $1.77 | $(0.54) | $0.55 | - Revenue increased by **42%** for the three months and **50.6%** for the six months ended June 30, 2025, compared to the prior year periods[31](index=31&type=chunk) - Net income for Q2 2025 was **$1.1 million**, a decrease from **$6.6 million** in Q2 2024, primarily due to a **$5.3 million** gain on extinguishment of debt in 2024 that did not recur[9](index=9&type=chunk)[31](index=31&type=chunk) - Total operating expenses significantly increased for both the three and six months ended June 30, 2025, driven by higher general and administrative and selling and marketing costs[31](index=31&type=chunk) Non-GAAP Adjusted EBITDA Reconciliation [Reconciliation Table](index=6&type=section&id=Reconciliation%20Table) This section reconciles Net Income (Loss) to EBITDA and Adjusted EBITDA for Q2 and H1 2025 vs. 2024, showing significant Adjusted EBITDA improvement after non-cash adjustments Non-GAAP Adjusted EBITDA Reconciliation | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Income (Loss) | $1,055 | $6,561 | $(4,621) | $2,033 | | Interest expense | $1,874 | $3,783 | $3,726 | $7,343 | | Depreciation and amortization | $299 | $262 | $573 | $480 | | EBITDA | $3,228 | $10,606 | $(322) | $9,856 | | Change in fair value of derivative liabilities | $(990) | $(3,717) | $3,911 | $(1,216) | | Stock-based compensation | $1,132 | $- | $2,116 | $- | | Gain on extinguishment of debt | $- | $(5,310) | $- | $(5,205) | | Adjusted EBITDA | $3,370 | $1,457 | $5,705 | $1,398 | - Adjusted EBITDA for Q2 2025 increased by **131% to $3.37 million** from **$1.46 million** in Q2 2024[9](index=9&type=chunk)[26](index=26&type=chunk) - Adjusted EBITDA for the six months ended June 30, 2025, increased by **308% to $5.71 million** from **$1.40 million** in the prior year period[26](index=26&type=chunk) - Stock-based compensation was a significant non-GAAP adjustment in 2025, totaling **$1.13 million** for Q2 and **$2.12 million** for the six months, compared to **$0** in 2024[26](index=26&type=chunk) Condensed Consolidated Balance Sheets [As of June 30, 2025 and December 31, 2024](index=7&type=section&id=As%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) The balance sheets show increased total assets and liabilities as of June 30, 2025, driven by higher inventory, property, equipment, warrant liability, and senior secured debt Condensed Consolidated Balance Sheets | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $8,496 | $10,237 | | Total Current Assets | $20,168 | $18,397 | | Total Non-current Assets | $12,878 | $11,722 | | Total Assets | $33,046 | $30,119 | | Senior secured debt | $26,774 | $25,305 | | Warrant liability | $12,018 | $8,107 | | Total Current Liabilities | $46,501 | $42,345 | | Total Non-current Liabilities | $1,320 | $491 | | Total Liabilities | $47,821 | $42,836 | - Total assets increased by approximately **$2.9 million**, from **$30.1 million** at December 31, 2024, to **$33.0 million** at June 30, 2025[27](index=27&type=chunk) - Total liabilities increased by approximately **$5.0 million**, from **$42.8 million** at December 31, 2024, to **$47.8 million** at June 30, 2025[27](index=27&type=chunk) - Warrant liability significantly increased from **$8.1 million to $12.0 million**[27](index=27&type=chunk) Consolidated Statements of Stockholders' Deficit [Three and Six Months Ended June 30, 2025 and 2024](index=10&type=section&id=Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) The statements of stockholders' deficit show an increased total deficit from December 31, 2024, to June 30, 2025, primarily due to net loss and stock-based compensation Consolidated Statements of Stockholders' Deficit | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Common Stock (Par Value) | $9 | $9 | | Additional Paid-in Capital | $241,248 | $238,685 | | Accumulated Deficit | $(256,042) | $(251,421) | | Total Stockholders' Deficit | $(14,775) | $(12,717) | - Total Stockholders' Deficit increased from **$(12.7) million** at December 31, 2024, to **$(14.8) million** at June 30, 2025[30](index=30&type=chunk)[35](index=35&type=chunk) - The accumulated deficit increased by **$4.6 million** during the six months ended June 30, 2025, reflecting the net loss for the period[30](index=30&type=chunk)[35](index=35&type=chunk) - Stock-based compensation contributed **$2.23 million** to additional paid-in capital for the six months ended June 30, 2025[35](index=35&type=chunk) Consolidated Statements of Cash Flows [Six Months Ended June 30, 2025 and 2024](index=12&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) The cash flow statements show a net decrease in cash for H1 2025 due to operating and investing activities, contrasting with a net increase in H1 2024 Consolidated Statements of Cash Flows | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net Cash Flows (Used in) Provided by Operating Activities | $(524) | $432 | | Net Cash Flows Used in Investing Activities | $(1,321) | $(206) | | Net Cash Flows Provided by Financing Activities | $104 | $316 | | Net Change in Cash During Period | $(1,741) | $663 | | Cash at End of Period | $8,496 | $2,460 | - Cash used in operating activities for the six months ended June 30, 2025, was **$(524) thousand**, a decrease from **$432 thousand** provided by operating activities in the prior year[37](index=37&type=chunk) - Investing activities used significantly more cash in 2025 (**$1.32 million**) compared to 2024 (**$0.21 million**), primarily due to increased purchase of property and equipment[37](index=37&type=chunk) - Cash at the end of the period decreased to **$8.50 million** from **$10.24 million** at the beginning of the period[37](index=37&type=chunk) [Supplemental Cash Flow Information](index=13&type=section&id=Supplemental%20Cash%20Flow%20Information) Supplemental cash flow information details non-cash investing and financing activities, including capitalized interest, shares granted for board fees, and right-of-use assets Supplemental Cash Flow Information | Non-Cash Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :----------------------------- | :----------------------------- | | Cash paid for interest | $2,255 | $2,055 | | Capitalize interest into senior secured debt | $407 | $3,850 | | Shares granted in lieu of board of director fees | $77 | $- | | Right-of-use assets obtained in exchange for lease liabilities | $430 | $- | | Warrants issued in conjunction with convertible promissory notes | $- | $3,633 | - Capitalized interest into senior secured debt significantly decreased from **$3.85 million** in 2024 to **$0.41 million** in 2025[38](index=38&type=chunk) - The company granted **$77 thousand** in shares in lieu of board of director fees and obtained **$430 thousand** in right-of-use assets in exchange for lease liabilities in 2025[38](index=38&type=chunk)

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The company faces substantial doubt about its going concern ability due to an accumulated deficit, negative working capital, and maturing debt, despite achieving operating income - The company has an **accumulated deficit**, **negative working capital**, and its **Senior Secured Note** is due in September 2025, raising **substantial doubt about its ability to continue as a going concern** for 12 months from the filing date[35](index=35&type=chunk) - Achieved **operating income** during the three and six months ended June 30, 2025, and the prior fiscal year ended December 31, 2024, due to **revenue growth** initiatives and a capital raise[36](index=36&type=chunk) - A **one-for-three hundred seventy-five (1:375) reverse stock split** of common stock was effected on October 18, 2024, impacting all share and per-share amounts presented[33](index=33&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Summary (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $8,496 | $10,237 | | Total Current Assets | $20,168 | $18,397 | | Total Non-current Assets | $12,878 | $11,722 | | Total Assets | $33,046 | $30,119 | | Total Current Liabilities | $46,501 | $42,345 | | Total Non-current Liabilities | $1,320 | $491 | | Total Liabilities | $47,821 | $42,836 | | Total Stockholders' Deficit | $(14,775) | $(12,717) | [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Statements of Comprehensive Loss Summary (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Revenue | $10,164 | $7,162 | $19,506 | $12,948 | | Gross Margin | $7,958 | $5,240 | $15,342 | $9,442 | | Operating Income | $1,877 | $1,992 | $2,863 | $942 | | Net Income (Loss) | $1,055 | $6,561 | $(4,621) | $2,033 | | Basic EPS | $0.12 | $2.08 | $(0.54) | $0.65 | | Diluted EPS | $0.01 | $1.77 | $(0.54) | $0.55 | [Condensed Consolidated Statements of Stockholders' Deficit](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Deficit) Statements of Stockholders' Deficit Summary (in thousands) | Metric (in thousands) | Balances as of Dec 31, 2024 | Six Months Ended June 30, 2025 | Balances as of June 30, 2025 | | :-------------------- | :-------------------------- | :----------------------------- | :--------------------------- | | Common Stock Par Value | $9 | $0 | $9 | | Additional Paid-in Capital | $238,685 | $2,563 | $241,248 | | Accumulated Deficit | $(251,421) | $(4,621) | $(256,042) | | Total Stockholders' Deficit | $(12,717) | $(2,058) | $(14,775) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Statements of Cash Flows Summary (in thousands) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net Cash Flows (Used in) Provided by Operating Activities | $(524) | $432 | | Net Cash Flows Used in Investing Activities | $(1,321) | $(206) | | Net Cash Flows Provided by Financing Activities | $104 | $316 | | Net Change in Cash During Period | $(1,741) | $663 | | Cash at End of Period | $8,496 | $2,460 | - Cash used in operating activities for the six months ended June 30, 2025, totaled **$0.5 million**, primarily due to a **net loss** of **$4.6 million** and a **$4.1 million** decrease in net operating assets, partially offset by non-cash charges for **derivative liabilities** (**$3.9 million**), **stock-based compensation** (**$2.1 million**), and debt amortization (**$1.1 million**)[148](index=148&type=chunk) - Cash used in investing activities for the six months ended June 30, 2025, totaled **$1.3 million**, primarily for purchases of property and equipment, including **$0.9 million** for leasehold improvements at the new headquarters[150](index=150&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) - SANUWAVE Health, Inc. commercializes patented regenerative medicine utilizing noninvasive ultrasound or shockwaves to promote tissue repair and regeneration[29](index=29&type=chunk) - **Substantial doubt exists regarding the company's ability to continue as a going concern** due to an **accumulated deficit**, **negative working capital**, and the **Senior Secured Note** maturing in September 2025. Management is actively engaged in discussions to refinance this debt[35](index=35&type=chunk)[37](index=37&type=chunk) - Revenue is recognized from system sales, consumables, parts (point-in-time), licensing fees (varying with agreement terms), and other services like warranties and repairs[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - The company is evaluating ASU 2024-03 (Expense Disaggregation Disclosures) and adopted ASU 2023-09 (Improvements to Income Tax Disclosures) in Q1 2025 with no material impact[53](index=53&type=chunk)[55](index=55&type=chunk) - The Merger Agreement with SEP Acquisition Corp. was terminated on June 25, 2024[57](index=57&type=chunk) Allowance for Credit Losses (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :----------------------------- | :----------------------------- | | Allowance for credit losses, Dec 31 | $1,147 | $1,237 | | Provision for credit losses | $136 | $113 | | Write-offs | $(5) | $(156) | | Allowance for credit losses, June 30 | $1,278 | $1,194 | Inventory Details (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Finished goods | $3,202 | $386 | | Parts and accessories | $2,709 | $3,763 | | Total Inventory | $5,911 | $4,149 | - A new operating lease for the company's headquarters commenced on March 28, 2025, for **5.5 years**, with an initial right-of-use asset and lease liability of **$0.4 million**. Lease incentives totaling **$586 thousand** were received[61](index=61&type=chunk)[64](index=64&type=chunk) Operating Lease Liabilities (in thousands) | (in thousands) | Operating Leases (Present Value) | | :------------- | :------------------------------- | | Total Lease Payments | $1,433 | | Imputed interest | $(377) | | Present value of lease liabilities | $1,056 | - The principal amount of senior secured debt increased to **$27.3 million** at June 30, 2025, from **$26.9 million** at December 31, 2024. The **Senior Secured Note** matures on **September 20, 2025**, and the company was in compliance with all covenants as of June 30, 2025[68](index=68&type=chunk)[71](index=71&type=chunk)[77](index=77&type=chunk) Debt Amortization and Interest Expense (in millions) | (in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Amortization of debt issuance costs and debt discount | $0.6 | $2.1 | $1.1 | $4.0 | | Interest expense | $1.9 | $1.4 | $3.7 | $3.1 | - Total accrued expenses decreased to **$3.3 million** at June 30, 2025, from **$4.7 million** at December 31, 2024, primarily due to a decrease in employee compensation accruals[80](index=80&type=chunk) - The **warrant liability** increased to **$12.0 million** at June 30, 2025, from **$8.1 million** at December 31, 2024, with fair value determined using the **Black-Scholes valuation model**[81](index=81&type=chunk) Warrant Liability Fair Value (in thousands, except per share data) | (in thousands, except per share data) | Balance at Dec 31, 2024 | Change in fair value | Balance at June 30, 2025 | | :------------------------------------ | :---------------------- | :------------------- | :----------------------- | | Warrant Liability Fair Value | $8,107 | $3,911 | $12,018 | | Warrants Outstanding | 390 | - | 390 | | Fair Value per Share | $20.79 | - | $30.82 | - All remaining outstanding convertible notes payable and related party notes converted to **591,802 shares** of common stock on October 18, 2024, totaling **$8.9 million** in principal and interest[87](index=87&type=chunk) Revenue by Type (in thousands) | Revenue Type (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Consumables and parts revenue | $6,692 | $4,951 | $12,780 | $9,258 | | System revenue | $3,445 | $2,112 | $6,643 | $3,484 | | License fees and other | $10 | $15 | $15 | $20 | | Product Revenue | $10,147 | $7,078 | $19,438 | $12,762 | | Rental Income | $17 | $84 | $68 | $186 | | Total Revenue | $10,164 | $7,162 | $19,506 | $12,948 | - The 2024 Equity Incentive Plan authorized **1,376,556 shares**. During the six months ended June 30, 2025, **65,500 performance- and market-based option awards** were granted, with **5,500 shares forfeited**. Total unrecognized compensation cost was **$9.9 million**, expected to be recognized over a weighted average period of **2.48 years**[93](index=93&type=chunk)[95](index=95&type=chunk)[97](index=97&type=chunk)[102](index=102&type=chunk) Stock Compensation Expense (in thousands) | Stock Compensation Expense (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenues | $9 | $18 | | General and administrative | $905 | $1,706 | | Selling and marketing | $208 | $366 | | Research and development | $10 | $26 | | Total expense | $1,132 | $2,116 | Stock Options Activity (in thousands, except price) | Stock Options Activity (in thousands, except price) | Number of Options | Weighted Average Exercise Price | | :-------------------------------------------------- | :---------------- | :------------------------------ | | Outstanding, December 31, 2024 | 1,137 | $15.97 | | Granted | 342 | $28.75 | | Exercised | (17) | $14.89 | | Forfeited | (153) | $19.45 | | Outstanding, June 30, 2025 | 1,309 | $17.53 | EPS Metrics (in thousands, except per share data) | EPS Metric (in thousands, except per share data) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Basic Net Income (Loss) | $1,055 | $6,561 | $(4,621) | $2,033 | | Diluted Net Income (Loss) | $65 | $6,561 | $(4,621) | $2,033 | | Basic EPS | $0.12 | $2.08 | $(0.54) | $0.65 | | Diluted EPS | $0.01 | $1.77 | $(0.54) | $0.55 | - The company purchases most product component materials from single suppliers, posing a risk of disruption if a supplier is lost[110](index=110&type=chunk) Major Vendor Purchases Percentage | Major Vendor Purchases | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Vendor A | 19% | 32% | 22% | 20% | | Vendor B | 10% | -% | 11% | -% | - In March 2024, the company received a one-time payment of **$2.5 million** for an exclusive license and option agreement related to a portfolio of patents in intravascular shockwave applications[111](index=111&type=chunk) - No pending legal proceedings are believed to have a material adverse effect on the company's business, consolidated financial position, results of operations, or cash flows[115](index=115&type=chunk) - The company operates in one reportable segment engaged in the design and sale of medical devices, with revenue primarily generated in the United States[116](index=116&type=chunk)[153](index=153&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew significantly, but net income declined due to the absence of prior non-recurring gains, despite improved operating income Revenue Performance (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----- | :----------------------------- | :----------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Revenue | $10.2 million | $7.2 million | $3.0 million | 42% | $19.5 million | $12.9 million | $6.6 million | 51% | Net Income (Loss) Performance (in millions) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change ($) | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change ($) | Change (%) | | :----- | :----------------------------- | :----------------------------- | :--------- | :--------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net Income (Loss) | $1.1 million | $6.6 million | $(5.5) million | -84% | $(4.6) million | $2.0 million | $(6.7) million | -327% | - **Operating income** for the three months ended June 30, 2025, was **$1.9 million** (flat YoY), and for the six months, it was **$2.9 million** (up **$1.9 million** YoY), driven by increased **revenue** and **gross margin**[123](index=123&type=chunk)[124](index=124&type=chunk) Net Income, EBITDA, and Adjusted EBITDA (in thousands) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net Income (Loss) | $1,055 | $6,561 | $(4,621) | $2,033 | | EBITDA | $3,228 | $10,606 | $(322) | $9,856 | | Adjusted EBITDA | $3,370 | $1,457 | $5,705 | $1,398 | - Increase in net sales primarily driven by a **29% increase** in **UltraMIST disposables** sold (3 months) and **31%** (6 months), and a **61% increase** in **UltraMIST systems** sold (3 months) and **86%** (6 months), along with improved pricing[131](index=131&type=chunk) - **Gross profit as a percentage of revenues** increased to **78%** (3 months) and **79%** (6 months) in 2025, up from **73%** in 2024, due to improved pricing initiatives on **UltraMIST systems** and applicators[132](index=132&type=chunk)[133](index=133&type=chunk) - **General and administrative expenses** increased by **120% ($2.2 million)** for the three months and **54% ($3.0 million)** for the six months, primarily due to increased headcount expenses and non-cash **stock-based compensation**[133](index=133&type=chunk)[134](index=134&type=chunk) - **Selling and marketing expenses** increased by **62% ($0.6 million)** for the three months and **41% ($0.9 million)** for the six months, mainly due to increased headcount expenses (including commissions) and non-cash **stock-based compensation**[135](index=135&type=chunk)[136](index=136&type=chunk) - **Other (expense) income, net**, decreased by **$5.4 million** (3 months) and **$8.6 million** (6 months) to a net expense, primarily due to the absence of a **gain on extinguishment of debt** and a decrease from the change in fair value of **derivative liabilities**, partially offset by decreased interest expense[139](index=139&type=chunk)[140](index=140&type=chunk) - The company has an **accumulated deficit** of **$256.0 million** and **negative working capital**, with the **Senior Secured Note** due in **September 2025**, raising **substantial doubt about its going concern ability**. Management is actively engaged in debt refinancing discussions[141](index=141&type=chunk)[142](index=142&type=chunk)[145](index=145&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating Activities | $(524) | $432 | | Investing Activities | $(1,321) | $(206) | | Financing Activities | $104 | $316 | - Inflation affects expenses such as employee compensation, office space leasing costs, and research and development charges, which may not be readily recoverable, potentially impacting the company's consolidated financial condition and results of operations[154](index=154&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company," the registrant is exempt from providing market risk disclosures [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and internal control over financial reporting were ineffective due to material weaknesses in accounting and IT processes - **Disclosure controls and procedures** were not operating effectively as of June 30, 2025[157](index=157&type=chunk) - **Material weaknesses** identified include a lack of **internal controls** over **key accounting and IT processes** (e.g., Equity, Financial Reporting, Accounts Payable, Revenue, Cash, Debt, **IT General Controls**) and **insufficient expertise** to properly apply U.S. GAAP to complex and non-routine transactions[158](index=158&type=chunk)[159](index=159&type=chunk) - The **remediation plan** includes implementing and enhancing **internal controls**, contracting for **external valuation**, hiring a **Director of Internal Audit**, deploying **Governance, Risk, and Compliance software**, hiring additional personnel, segregating duties, and collaborating with an external vendor to enhance **IT general controls**[160](index=160&type=chunk)[161](index=161&type=chunk)[163](index=163&type=chunk) [PART II – OTHER INFORMATION](index=38&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) No pending legal proceedings are expected to have a material adverse effect on the company's business - For information regarding legal proceedings, refer to Note 17 to the condensed consolidated financial statements. The company does not believe there are any pending legal proceedings that will have a material adverse effect on its business[115](index=115&type=chunk)[167](index=167&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) Updated risk factors highlight a new limitation on net operating loss carryforwards due to ownership shifts - An IRC Section 382 analysis showed that **$44.2 million** of the company's **net operating loss (NOL) tax attributes** would expire before becoming available under the limitation as a result of shifts in ownership[169](index=169&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported during the period [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period [Item 5. Other Information](index=39&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - None of the company's directors or officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of securities intended to satisfy the affirmative defense conditions of **Rule 10b5-1 trading arrangements** of the Exchange Act during the three months ended June 30, 2025[173](index=173&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, covering merger agreements and corporate governance documents - Key exhibits include the Agreement and Plan of Merger and its amendments, Articles of Incorporation and amendments, Amended and Restated Bylaws, Certificates of Designation for various Preferred Stock series, and Rule 13a-14(a)/15d-14(a) and Section 1350 Certifications[174](index=174&type=chunk)[175](index=175&type=chunk) [SIGNATURES](index=42&type=section&id=SIGNATURES)

Company Overview - Sanuwave Health, Inc. is a leading provider of next-generation FDA-approved wound care products focused on research, development, and commercialization of patented, non-invasive medical systems for tissue repair and regeneration [1][2][3] - The company applies its patented energy transfer technologies in various medical fields including wound healing, orthopedic/spine, aesthetic/cosmetic, and cardiac/endovascular conditions [3] Financial Results Announcement - Sanuwave will host a live conference call on August 8, 2025, at 8:30 AM (ET) to present its Q2 2025 financial results [1] - Access to the call can be made via toll-free and international numbers, with a specific conference ID provided for participants [1] Replay Information - A replay of the conference call will be available until August 29, 2025, with specific toll-free and international numbers for access [2]

Core Viewpoint - Sanuwave Health, Inc. is set to present at the 45th Annual Canaccord Genuity Growth Conference, highlighting its position as a leading provider of next-generation, FDA-approved wound care products [1][2]. Company Overview - Sanuwave Health focuses on the research, development, and commercialization of patented, non-invasive medical systems aimed at repairing and regenerating skin, musculoskeletal tissue, and vascular structures [3]. - The company offers an end-to-end wound care portfolio that includes regenerative medicine products designed to restore the body's normal healing processes [4]. Conference Details - The group presentation is scheduled for August 13, 2025, from 9:30 to 9:55 a.m. ET, with opportunities for one-on-one meetings with investors available throughout the conference [2].

Core Insights - Sanuwave Health, Inc. reported preliminary revenues of $10.1 million to $10.2 million for Q2 2025, marking the highest quarterly revenues in the company's history [1][2] - The revenue for Q2 2025 reflects an increase of 41% to 42% compared to Q2 2024, while the first half of 2025 saw a revenue increase of 50% to 51% compared to the first half of 2024 [1][2] Company Developments - The CEO highlighted that the first half of 2025 has been a transition period for the company, with the addition of a new head of sales and a new head of commercial operations [3] - The company is expanding its sales team, reaching 13 salespeople and covering all national sales territories for the first time under the current CEO [3] - A national accounts manager has been added to pursue larger market opportunities, indicating a strategic focus on growth [3] Future Outlook - The company plans to release full Q2 results around August 8, 2025, providing a more comprehensive update on performance and future plans [3] - Sanuwave is focused on the research, development, and commercialization of patented, non-invasive medical systems aimed at tissue repair and regeneration [4] - The company's portfolio includes regenerative medicine products that support normal healing processes across various medical conditions [5]

Group 1 - The article discusses the experience of an investor who began trading during the pandemic and emphasizes the importance of analyzing earnings reports to identify potential growth stocks [1] - The investor successfully identified several future winners, including OPRX, OTRK, FUBO, and PLUG, by focusing on key information from earnings transcripts and reports [1]

Core Insights - Sanuwave Health, Inc. has appointed Dustin Libby as EVP of commercial operations, bringing extensive experience in medical device commercialization and growth [1][2][3] Group 1: Leadership and Experience - Dustin Libby has 20 years of experience in the medical device industry, focusing on commercial growth and sales operations [2] - Previously, Libby held leadership roles at Abiomed, where he scaled a $15 million surgical business to over $500 million in revenue [3] - His experience includes roles at Smith & Nephew, Arthrex, and Hill-ROM, where he directed sales enablement and operational strategy across various therapeutic areas [3] Group 2: Company Growth and Strategy - Sanuwave is in a growth phase and aims to extend its leadership in the wound care market [4] - The company focuses on the research, development, and commercialization of patented, non-invasive medical systems for tissue repair and regeneration [5] - Sanuwave's portfolio includes regenerative medicine products that help restore normal healing processes in various medical conditions [6]

Core Insights - Sanuwave Health, Inc. has been included in the Russell 2000® Index as part of the 2025 Russell indexes reconstitution, effective June 30, 2025 [1] - The company will also be included in the broader Russell 3000® Index and the Russell Microcap® Index [1] Group 1: Company Overview - Sanuwave Health focuses on the research, development, and commercialization of patented, non-invasive medical systems aimed at repairing and regenerating skin, musculoskeletal tissue, and vascular structures [4] - The company's wound care portfolio includes regenerative medicine products that assist in restoring normal healing processes [5] - Sanuwave utilizes patented energy transfer technologies across various medical fields, including wound healing, orthopedic/spine, aesthetic/cosmetic, and cardiac/endovascular conditions [5] Group 2: Industry Context - The Russell U.S. indexes encompass the 4,000 largest U.S. stocks ranked by total market capitalization as of April 30 each year [2] - Membership in the Russell 3000® Index leads to automatic inclusion in either the Russell 1000® Index or the Russell 2000® Index, along with relevant growth and value style indexes [2] - As of June 2024, approximately $10.6 trillion in assets were benchmarked to the Russell U.S. indexes, which are maintained by FTSE Russell [3]